Alan Israel owes the people of Iowa $2 million but lives in a $1.3 million home in Paradise Valley, Arizona, the wealthiest suburb of Phoenix.

He has lived in Arizona for at least 30 years, though many of his business dealings — encompassing nursing homes, apartments and housing development — have been in Iowa.

His story, based on hundreds of filings in state and federal court, is about the intersection of commerce and health care in Iowa, and the profits that nursing homes can generate for owners whose primary business is real estate, not health care.

There are the two Keokuk nursing homes he allegedly used as a money-laundering operation, collecting $3 million in Medicaid overpayments while elderly residents complained they had been left to lay in their own urine.

There’s the Dubuque apartment complex Israel launched with federal backing, home to more than 100 low-income families whose rent was subsidized by taxpayers. The complex was sold last year after Israel was accused of looting it to pay for vacations, massages and personal indulgences while the apartments deteriorated.

And there’s the troubled Ankeny housing development that left behind a trail of angry investors. His business partner — a physician who also served as medical director for the Keokuk care facilities — sued him; buyers of homes complained the houses lacked kitchen sinks or toilets; and city officials said he had sold some of the houses before they were inspected and approved for occupancy.

Three years ago, Israel appeared to be in serious trouble when the Iowa attorney general sued him for $17.4 million, alleging his two nursing homes — Dave’s Place and Lexington Square — were being used to bilk taxpayers through phony Medicaid claims.

Israel also was being criminally prosecuted in federal court, where the Department of Justice accused him of bank fraud for allegedly obtaining federally backed loans for one of the care facilities, then spending the money elsewhere.

At the time, Israel claimed he was broke, telling an Iowa judge he did "not have steady income or employment” and couldn’t pay a $2,000 court-ordered penalty. Referring to his Arizona home, he said he rented the house using money loaned to him by family members. He had no real estate he could use to either draw income or secure loans, he said.

Since then, however, Israel has managed to pay $1 million toward a $3 million settlement with the attorney general, and last year an Iowa bank released a claim against him for $2.6 million, saying the debt had been paid.

Today, Israel's legal entanglements are largely limited to long-simmering litigation among his siblings over their father’s estate, estimated to be worth $50 million. Earlier this year, a private investigator was criminally charged for attempting to bug the office of Israel’s brother, David, at the behest of Israel’s sister, Diane. An associate of Diane’s now stands accused of trying to arrange a hit on David.

Meanwhile, at Lexington Square, elderly and disabled residents are concerned about the quality of care they’re receiving and say the state isn’t responding.

Sheila Jackson, 65, has lived at Lexington Square for six years and serves on the resident council. She said residents sometimes wait 30 or 40 minutes to have their call-lights answered.

“I’ve been complaining for two years, but nothing ever gets done,” Jackson said.

The home’s administrators say they deliver quality care. But last fall, after the home sued a contractor for installing an allegedly defective call-light system, the home’s public relations director stated under oath that residents had been placed “at great danger” because of the faulty call lights.

Israel is now barred from managing, or even setting foot in, the two Keokuk homes. He did not return calls and emails from the Des Moines Register, or respond to requests made through his lawyers and relatives.

Israel accused of ‘looting’ low-income apartments

Alan Israel was driving through Iowa on July 15, 2015, when he received a call from his brother David, a wealthy Chicago-area developer.

A private investigator had just found a GPS tracking device attached to the rear fender of David’s BMW. At the time, Alan was driving David’s Jeep Grand Cherokee, so David suggested Alan check the Jeep for a similar device.

Alan looked under the car’s rear fender and found a small tracking device similar to the one found on David’s BMW.

Just a few weeks before, a bodyguard who provided personal security for Alan and David’s sister, Diane, had placed the devices on the two cars. He had also made his way into David’s Chicago office disguised as a Fed Ex delivery man and dropped a listening device into a planter.

Around that same time, a pink teddy bear — ostensibly a gift from a cancer center — was delivered to David’s office with an electronic listening device planted inside.

Diane’s use of bodyguards was a sore point with Alan. “Why she has the bodyguards, I have no frickin’ idea,” he said in a 2016 deposition. “Nobody ever threatened her. … She had a cheese business that made no money.”

The siblings — Diane, Alan, David and another brother, Harey — were children of the late Aaron Israel, a Chicago developer and shopping mall owner who had emigrated to the United States from Hungary in 1918.

By the time of his death in 2014, Aaron Israel had amassed $50 million to $60 million.

According to court testimony by Diane, she inherited about $20 million, which triggered a torrent of litigation among the siblings, who had a long history of courtroom conflict.

In 1988, David had sued his mother, then 77, for defamation. A few years later, David and Harey were sued by their father. Then Harey sued Diane; David sued his father; Harey, David and Alan sued Diane and their father; Diane sued Alan; and David sued Diane and her bodyguards over the eavesdropping and tracking devices.

One of those bodyguards, Michael Bucon, would eventually be convicted of trespassing and attempted cyberstalking. But on the day Alan found the GPS device attached to the Jeep, he was dealing with his own legal problems.

He was being sued by the family of Robert Dennis, who had no pulse when staff at Lexington Square discovered him less than two hours after his admission. The family claimed the home had failed to place Dennis on a physician-ordered ventilator and he stopped breathing, eventually dying.

At the same time, the state of Iowa determined that Alan owed taxpayers more than $3 million for Medicaid overpayments collected by Dave’s Place, a Keokuk facility for people with mental illness.

Meanwhile, Diane was pursuing two lawsuits against Alan — one for allegedly “looting” the federally backed, low-income apartment complex he operated in Dubuque, and one for refusing to pay her $381,000 he had borrowed to help finance a housing development in Ankeny.

In the Ankeny case, Alan argued he had been under extreme financial pressure when he agreed to repay the money. A federal judge rejected that argument, pointing out that the pressure was self-inflicted: He had sold land in the Siena Hills development to prospective homeowners without first securing financing to develop the property, the judge said.

He ordered Israel to pay Diane the full $381,000.

In the Dubuque case, Diane was suing Alan on behalf of their father’s estate, accusing Alan of using the apartment complex as “his own personal piggy bank” even though he had only a 1 percent stake in the taxpayer-subsidized operation. The complex, she said, generated $1 million in annual income thanks in part to the federal subsidy. She claimed Alan borrowed more than $1 million from the complex; used $250,000 of its assets to pay for personal expenses; and failed to pay $300,000 in property taxes, which put the complex at risk of foreclosure.

A forensic accountant later stated in a sworn affidavit that Alan appeared to have shuffled tens of thousands of dollars between the two Keokuk care facilities he owned, a family trust and the Dubuque apartments.

Over 16 years, the accountant said, the apartment complex paid Israel almost $1 million in management fees, plus $1.5 million in cash disbursements, plus $1.3 million in canceled debt. The complex also paid at least $90,000 to two of his children although, the accountant said, he “saw no evidence of any work being done” by the two.

In addition to the lawsuits, Israel was about to begin serving a three-year term of probation. Federal prosecutors had charged him with bank fraud and loan application fraud, alleging he had secured federally guaranteed loans totaling $2.6 million to benefit Dave’s Place, but then used the money for sidewalks and other improvements at the Ankeny housing development, and to pay off loans from Dr. Wilson Davis, the medical director at the Keokuk homes and a partner in the Ankeny housing development.

Israel eventually pleaded guilty to three misdemeanor counts of conversion, was placed on probation and fined $15,000.

But in 2015, as he pulled the magnetic GPS tracking device out from under the Jeep, Israel faced a bigger threat in the form of a civil lawsuit by the Iowa attorney general, who alleged he was using Lexington Square and Dave’s Place to launder money.

According to the state, Israel and his son had made “repeated false or fraudulent claims for reimbursement from the Iowa Medicaid program” by padding the homes’ Medicaid cost reports with personal expenses. The inflated costs were then used to draw down more Medicaid money as “reimbursement” for resident care.

The lawsuit over the nursing homes would prove to be even more costly than those tied to the Ankeny and Dubuque properties.

Using care facilities 'as the family’s personal checkbook'

The attorney general claimed Israel had been defrauding Medicaid as far back as January 2010, when Israel was preparing Lexington Square for its annual state inspection.

At the time, the state alleged, Israel promised the home’s director of nursing, Terri Abell, that if the home passed the inspection he’d make the $204 monthly payments on her new Rockwood UltraLite camper trailer for the next year.

The home passed the inspection, and according to the state, Israel dutifully made the $2,444 in camper payments. But he then filed a report with Medicaid, allegedly claiming the money was spent on “support care” for residents of the home — triggering an increase in Medicaid payments.

Just a month earlier, the home’s administrator at the time, Kathy Gabel, had become frustrated with cash shortfalls at the home and the impact on its residents.

She wrote Israel:

“There should be plenty of money to operate Lexington Square, pay bills on time and still have money left over. … The fact that we don’t have money is NOT because the management team does not work hard at making money. Since Susan, Marc and I took over the business in 2005, Lexington Square has realized $1,280,000 ($1.2 million) in profits!!!”

In August 2010, Israel’s accountant, Lawrence Litman, sent Israel an email in which he said he was no longer going to work with him — in part, he said, because Israel was using his care facilities “as the family’s personal checkbook.”

Litman added:

“Perhaps you really don’t know that is not allowed … but I can tell you I have seen this practice in the past and it did not end well for the local family. In fact, people did some significant jail time by the time Medicare, Medicaid and the IRS were done with them.”

Israel didn’t have to worry about jail time. The attorney general’s office wasn’t pursuing the fraud case criminally. Instead, it had filed a civil-court action, hoping to recover $17.4 million in damages.

But in 2016, three years after filing the case, Israel and the attorney general agreed to settle the case for the $3 million owed by Dave’s Place for Medicaid overpayments. At the same time, the state lifted its prohibition on Israel managing the two homes.

That arrangement was scuttled last year when federal officials banned Israel from all Medicaid- and Medicare-funded programs. The ban meant that Lexington Square and Dave’s Place, which Israel was running, would lose most of their funding.

To keep the homes open, the attorney general negotiated a new settlement with Israel: He would place the companies into an irrevocable trust, relinquishing his roles as owner and manager of the homes. The trust would be run, and is still run today, by two of Israel’s accountants and an Arizona businessman.

The legal battles between Diane and her brothers are ongoing, and reached a crescendo earlier this year when Ronen Moyal, a private investigator who had once worked for Diane, gave a deposition in which he said one of Diane’s bodyguards, James Adams, with Diane in the room, had tried to commission David's murder.

“Adams said to me, ‘Listen. We need help,’” Moyal recalled in his deposition. “I said, ‘What kind of help do you need?’ He said, ‘We really need to, we really need to take this guy out of the picture.’ … He said, ‘We need this guy hurt.’ I said, ‘What do you mean, hurt? I mean, hurt-hurt, hurt scared, hurt bloody, hurt under the ground? What is hurt?’ … And James Adams said, ‘We need to get rid of this guy. He’s a problem.’”

In a previous written statement filed with the court, Moyal was even more specific, alleging Diane told him, “We need to get rid of David,” and that someone needed to do “whatever it takes” to make that happen. Adams, Moyal claimed, then told him that if the matter wasn’t taken care of, he’d “hire two n-----s on the south side and take David out for $10,000.”

In recent court filings, Diane told a federal judge she and Adams are now the subject of a criminal investigation — an apparent reference to Moyal’s allegations of an attempted hit.

According to Moyal, David was a target because he was “the moneyman” — paying for Alan’s legal expenses and perpetuating the litigation over their father’s estate.

David declined to comment for this story, citing pending litigation, but said in a 2015 deposition that he paid Alan’s legal expenses because he was willing to “do whatever it takes to inflict pain and harm” on Diane.

While that fight plays out in a Cook County courthouse, Alan Israel's Iowa conflicts are largely resolved.

Elements of the Ankeny housing development were sold in 2012 and 2013, and the Dubuque apartment complex was sold last year for $4.8 million — although it’s unclear how much of that, if any, Israel would have collected.

Three years ago, Israel testified that although he was living in Paradise Valley, he was surviving on Social Security income and money borrowed from his family.

Diane argued otherwise, claiming bank records showed he had been spending $250 per day; transferring tens of thousands of dollars to unknown individuals; vacationing at Trump International Hotel in Las Vegas; and paying for massages at San Diego’s Hotel Del Coronado.

The source of his income, Diane claimed, was the “cash cow” Dubuque apartment complex — home to more than 100 low-income families — that he had “looted” through exorbitant fees, loans and gifts.

After Israel admitted to borrowing $250,000 from the complex to pay personal legal expenses, a judge turned over control of the property to a receiver, who reported that virtually all of the apartment building’s bank accounts had been depleted and the buildings’ windows, siding, stairwells, sidewalks and parking lots were all in need of repair.

An account that was supposed to contain renters’ refundable security deposits was short almost $9,000, which Israel was asked to repay.

State inspectors have been at Lexington Square for most of the past two weeks, following up on resident deaths and complaints of neglect.

Medicaid, the tax-payer-funded program Israel was accused of defrauding, still generates income for him thanks to the trust set up to operate Lexington Square and Dave’s Place after Israel was banned from the Medicaid program.

The trust agreement negotiated by the Iowa attorney general specifies that "all net income" from the trust will be paid to Israel in "convenient installments" to pay for his "health, education, maintenance and support."